Time Warner Cable vs. Comcast: Which Stock Is a Better Buy Now?

2015 has been rough on media companies.

It was the year that cord-cutting, or the practice of customers dumping cable TV subscriptions in favor of online streaming services like Netflix, Hulu and the like, became a game-changing phenomenon.

In August 2015, The Walt Disney Co. spooked investors when it announced that ESPN had lost subscribers and revised its cable-TV outlook downwards. One month later, Time Warner Inc. lowered its earnings outlook and the media sector started looking shaky.

For the upcoming year, cable stocks may just be the saving grace for the sector, as they shift focus to increasing their broadband market share.

We compare two of the best stocks in the space, which could have been one company last year, and tell you which one holds more promise to deliver solid returns in 2016.

TWC Chart TWC data by YCharts

Time Warner Cable (TWC)

Despite its merger with Comcast (CMCSA) falling apart in mid-2015, TWC managed to end the year on a highly positive note. The stock gained 25.5%, and is not trading very far away from its 52-week high of $194.22.

Part of the reason is that after its deal collapsed with Comcast, Charter Communications Inc. (CHTR) came and made a deal with Time Warner Cable. The U.S. Federal Communications Commission is currently reviewing the merger of the two rivals, which also has to receive a nod from the U.S. Department of Justice. If the deal comes through, the new merged entity would provide faster internet to customers and be the internet and cable company only second to Comcast.

Despite the turmoil in the industry, TWC has consistently raised dividends from $0.40 per quarter in 2010 to $0.75 in 2014, and has kept the number constant in 2015. Its dividend yield stands at 1.62%.

After reporting a 3.6% year-over-year (YoY) increase in revenues to 5.92 billion in the most recent quarter, and registering higher than expected high-speed data customers, Time Warner Cable is readying itself for a lucrative 2016.

The company, along with Direct TV and Dish Network, voiced plans to raise rates in 2016 and is depending on its "Gigasphere" technology to help it achieve higher internet speeds in 2016. A continuous increase in revenue in quarters ahead seems quite likely.

Nineteen analysts covering TWC have a 12-month price target of $205 for the stock, representing a 12% increase from its current price.

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